Software businesses are generally high margin businesses. But along with this feature comes some risks. Here’s an excerpt from a recent post by Scott Galloway (which is actually about FedEx):

With any software start-up, there is a non-zero probability that you wake up the next day and find that a better-resourced firm (Microsoft, Oracle, Salesforce, Adobe) has deployed 200 engineers to copy your product, bundle it with their stack for free, or near free, and … welcome to zero. I believe this is happening to Slack, but more slowly than Netscape, as Microsoft’s General Counsel has likely coached Satya to charge a nominal fee for Teams and let Slack bleed out, instead of putting a bullet in its head and stirring the DOJ from a 3-Ambien slumber.

Real estate, by comparison, doesn’t get disrupted in quite the same way. A location/city can lose its economic purpose (Great Grimsby is just one example), but as long as there are growth tailwinds the real estate should do well.

Venture capitalist Fred Wilson has on many occasions written about how he (and his firm) made a fortune in the dot-com era, only to lose it all and have to remake it again over the subsequent decades.

One the lessons learned from that experience (according to his blog), was to take some of that second tech fortune and invest it into hard assets — namely real estate. That feels right to me.